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A new study conducted by Crypto Fund Research has revealed that 20 percent of all the hedge funds launched in 2018 are crypto-focused and that crypto funds now represents 3% of all hedge funds.

Crypto hedge funds gathering steam despite the bear market

The findings from this research show that the crypto hedge fund sector is gathering steam despite the bear market affecting the prices of cryptocurrencies since the start of the year.

According to the research, there is a 90 percent increase in the number of cryptocurrency hedge fund launches in the first three quarters of 2018, and the number is expected to surpass 120 by the end of the year.

Since the start of the year, a total of 600 hedge funds have been launched of which cryptocurrency based funds account for 120. The three leading cryptocurrencies, Bitcoin, Ethereum, and Ripple are the main targets of these funds, the researchers noted.

Crypto hedge funds have seen a significant increase over the past 2 years as it recorded 18 percent and 20 percent in 2017 and 2018 respectively. This is far better than the 3 percent recorded in 2016 when only 21 crypto hedge funds were launched in total.

Explaining the findings of its research, Crypto Fund Research stated that the number of crypto hedge funds has skyrocketed since the beginning of 2017.

Currently, roughly two-thirds of all currently operational crypto funds have launched in the last seven quarters, through the third quarter of this year.

Despite crypto funds rising in number over the past two years, the overall market picture is still bleak. The data provided by Crypto Fund Research shows that there are 303 crypto hedge funds at the moment.

This is relatively low considering the financial markets has more than 9,000 hedge funds. Also, the crypto funds comprise of just $4 billion in asset value which is a meager amount compared to the $3 trillion controlled by the hedge funds in all markets.

The rise in crypto hedge funds this year dismisses the theories by some who believe that funds, along with similar opportunities, see an influx of interest and investment in bull markets, but not in bear markets.

Crypto hedge funds break from the norm

Joshua Gnaizda, the founder of Crypto Fund Research, while commenting on the findings of the research stated that in 2018, explains that there has been a decrease in the launch of traditional hedge funds this year, however, crypto hedge funds have been an exception to the trend.

He added that the bear market has been in play since the start of the year and regulatory uncertainty persists in much of the world. All those challenges haven’t stopped managers from launching new crypto hedge funds at a record pace.

He went on to add that they don’t believe that the rate of new launches is sustainable long-term as there are some few signs that point to a possible slowdown.

Crypto Fund Research meanwhile identified emerging markets in Australia, China, Malta, Switzerland, the Netherlands and the United Kingdom to rival traditional markets in the United States.